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Robinhood, in need of cash, raises $1 billion from its investors

Robinhood, one of the largest online brokerages, has grappled with an extraordinarily high volume of trading this week as individual investors have piled into stocks like GameStop.

January 29, 2021 / 09:03 PM IST
This photo illustration shows the logo of trading application Robinhood on a mobile phone in Arlington, Virginia on January 28, 2021. (PC-AFP)

This photo illustration shows the logo of trading application Robinhood on a mobile phone in Arlington, Virginia on January 28, 2021. (PC-AFP)

Facing an onslaught of demands on its cash amid a stock market frenzy, Robinhood, the online trading app, said Thursday that it was raising an infusion of more than $1 billion from its existing investors.

Robinhood, one of the largest online brokerages, has grappled with an extraordinarily high volume of trading this week as individual investors have piled into stocks like GameStop. That activity has put a strain on Robinhood, which has to pay customers who are owed money from trades while posting additional cash to its clearing facility to insulate its trading partners from potential losses.

Robinhood: The trading app co-founded by Indian-American caught in GameStop storm

On Thursday, Robinhood was forced to stop customers from buying a number of stocks like GameStop that were heavily traded this week. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corp.